Industrial Q Kentucky

CBRE’s Grove: No surprise that Louisville’s industrial market continues to thrive

CBRE's Grove: No surprise that Louisville's industrial market still thrivin,ph01

Six leases of more than 500,000 square have closed in the Louisville market in distribution warehouse buildings since the third quarter of 2014. During the same time, 11 distribution warehouse leases of more than 200,000 square feet have closed in the market.

That’s the sign of a truly busy market.

Kevin Grove, senior vice president with the Louisville office of CBRE, told Midwest Real Estate News that as busy as the industrial market here has been, there are no signs of it slowing any time soon.

“As with all the markets across the country, e-commerce has been the big driver in Louisville,” Grove said during a recent interview. As that need grows, the need for additional warehouse space grows with it.”

But e-commerce, as important as it is, isn’t the only driver fueling Louisville’s busy industrial market today. And that fact – that Louisville is fortunate enough to have several drivers pumping life into this commercial sector – is the real reason why industrial leases, sales and spec development are all on the rise in this key Kentucky city.

“I can point to several things driving our industrial market,” Grove said. “It’s not just one driver. A lot of markets have one or two drivers. We have three or four that a pretty significant. We are blessed in that way.”

What are those drivers? First, there’s Louisville’s location in the center of the country. It’s a manageable drive to most major cities across the country from here. Louisville features several major interstates, too, that make getting into and out of the city easy.

The UPS Worldport at Louisville International Airport has long been a key driver of the indutrial market here, too. This is the seventh-busiest air hub in the world, and is a key resource for industrial users.

Louisville is also home to two Ford assembly plants and GE Appliances. These big users have long provided yet another boost for the local industrial market.

Because Louisville’s industrial market is so strong, developers are building plenty of spec buildings in the sector. This isn’t exactly a new trend, either. Grove said that the first big wave of spec industrial construction, after the economy’s recovery from the Great Recession, started in 2014. There was then a bit of a slowdown in spec in 2015.

During that slowdown, developers were waiting to see how the market would respond to the new spec construction. Fortunately, the market responded well, with tenants filling that space quickly. In 2016 and the eary parts of 2017, then, Louisville has seen another strong wave of spec construction.

Grove said that he’s not surprised at how strong the Louisville industrial market has been and how long it’s been such a good market. There are just too many positives here for industrial users.

“It’s a great place to live,” Grove said. “The cost of living is low. People come to Louisville and are surprised at how much they like it. You get all four seasons. There are a lot of parks and hiking. You have horse racing. The bourbon industry continues to grow. Like Wine Country is to California, the Bourbon Trail is to Louisville.”